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Member, Beacon International Group, Ltd.
SYDNEY, AustraliaThe Australian Prudential Regulation Authority said that it has finished its investigation into Zurich Australian Insurance Ltd. over a series of allegedly improper financial reinsurance transactions undertaken by the company in 2000.
APRA, the Australian insurance regulator, said it is satisfied with all remedial actions taken by ZAIL, and that it will take no further action against the company.
The transactions, undertaken with General & Cologne Re Group Australia, in some cases involved no genuine risk transfer, APRA said in its statement. The deals, which APRA described as "a complex and opaque arrangement that involved multiple contracts spanning several legal jurisdictions," resulted in ZAIL's profits being overstated, the regulator said.
In its statement, APRA noted that it is still finalizing actions against certain individuals but that no criminal actions will be pursued. In addition, it said that it is working to complete its investigation of GCRA.
During its investigation of the reinsurance transaction, APRA has taken action against several former Zurich employees, most recently disqualifying Alan Parsonson from acting as a director or senior manager of an insurer. Mr. Parsonson was regional manager of Australia/Pacific for Zurich Insurance Co. and a director of ZAIL and Zurich Financial Services Australia Ltd. during 2000 and 2001.
APRA said in a March 7 statement that Mr. Parsonson "knowingly procured ZIC's approval of ZAIL's entry into a reinsurance contract designed to give the false appearance that ZAIL had significantly improved its financial position and solvency in 2000" and that his conduct "enabled ZAIL to mislead APRA, ZAIL's auditors and ratings agencies."